Buy Alert: Gilead Sciences (GILD)

By Jim Pearce • December 15, 2016

TRADE INSTRUCTIONS
Date: December 15, 2016
Name: Gilead Sciences
Symbol: GILD
Type: Open
Limit: Buy below $78

TRADE TARGETS
Holding Period: 6 months
Target Return: 12.8%
Annualized Return: 25.6%
Target Price: $88
Stop Loss Level: $68

COMPANY DESCRIPTION

Gilead Sciences, Inc. is a research-based biopharmaceutical company. The Company’s principal areas of focus include human immunodeficiency virus (HIV), liver diseases, such as chronic hepatitis C virus infection and chronic hepatitis B virus infection, cardiovascular, hematology/oncology and inflammation/respiratory. The Company’s Nimbus Apollo program is a Phase II ready clinical program for NDI-010976 and related metabolic and liver diseases. Link to company website.

TRADE RATIONALE
Sooner or later something has to give for Gilead, and recent share price behavior suggests the protracted dip in its stock price may be turning around. It just crossed above its 50DMA after spending the entire post-election rally beneath it, and has had net positive trading volume on five of the past six trading days. And according to OptionMonster, somebody just made a huge bet on the December 76 calls that expire tomorrow.

Gilead’s share price has been falling for the past eighteen months as it has come under attack for price gouging on its effective HEP-C treatment. But it is now trading at only 7 times forward estimated (revised) earnings, suggesting the selling has gone too far. For that reason it now earns a solid score of 8 from my IDEAL Stock Rating System (scale of 0-10, higher is better), and it earns a perfect score from one of the most reliable algorithms from our Rapid Profits Matrix based on its very high Earnings Yield and Return on Total Capital.

However, I am giving this trade six months to work out given uncertainty over how the Trump administration will revise the Affordable Care Act. It may also come under some duress during year-end window dressing by portfolio managers over the remainder of this month, although at this point I think just about everyone who was inclined to sell this stock has already done so. Gilead is scheduled to release its next set of quarterly results on the last day of January, so we may see a lot of jockeying in the stock in the days leading up to that announcement.

NOTE: GILD is optionable.

Stock Talk

Comments Oldest First

Comments Guidelines

HowieA

12/15/16 ‐ 9:47am ET December 15, 2016 at 9:47am ET

Bought June 75 calls @ $6.40

black arrow

12/15/16 ‐ 9:52am ET December 15, 2016 at 9:52am ET

Hi Fellow members,
This is a time to remember to not try to be the first ‘kid’ on the block to get in. I have quickly added a 10 minute time period chart. a rule Can be to wait for 10 short term symbols to see todays trend before plunking down your cash. Now the red line is the 50 period Exponential Moving Avg. you may still want to enter a trade to get a better price, but you are saving $, over buying at the mkt first minute. This is VERY Short term to say this but the 50 day is usually strong support. Note in this case 50 period since chart is less than a day. Its going up now!!
http://schrts.co/ZGxfaa

black arrow

12/15/16 ‐ 11:38am ET December 15, 2016 at 11:38am ET

noticed I had wrong link apologies this should be better: http://schrts.co/c0Eq3t

black arrow

12/15/16 ‐ 10:05am ET December 15, 2016 at 10:05am ET

Hi again, now here is a daily chart.
http://schrts.co/FnoMNM
I am in at 75.45
Also bt a call GILD 20 Jan 17 72.50 @ 4.50
don’t interpret this as copy the option I bt since I admit I am not highly qualified in that area. proof of that may be it is down 0.20 cents already
Thanks Jim for a thoroughly vetted rec for us in a stock which has been of interest to me a long while
have a good one

Rick

12/15/16 ‐ 10:38am ET December 15, 2016 at 10:38am ET

In at $75.71

Ado Casagrande

12/15/16 ‐ 11:04am ET December 15, 2016 at 11:04am ET

IN AT 75.23

Ado Casagrande

12/15/16 ‐ 11:07am ET December 15, 2016 at 11:07am ET

just wondering ? what price did jim get this stock at?

Jim Pearce

12/19/16 ‐ 9:27am ET December 19, 2016 at 9:27am ET

Our entry price is reflected in the Open Trades table under the Portfolio tab at the top of this page.

Roger Hill

12/15/16 ‐ 11:28am ET December 15, 2016 at 11:28am ET

Bought GILD170519C75 for $5.83.

black arrow

12/19/16 ‐ 8:53am ET December 19, 2016 at 8:53am ET

Hi Roger,
Since you have demonstrated success at something I can’t so far accomplish can you explain [this is a MAC] how you got your picture to get in the appropriate place please? I read something about it once but unsure what happened to it. If its a nuisance just disregard – but if easy then thanks

Roger Hill

12/19/16 ‐ 6:29pm ET December 19, 2016 at 6:29pm ET

Hi Black Arrow,
I’m not sure. I have a blog and when I set up my profile for the blog I sent in a picture that somehow became my standard internet photo. I’ve been meaning to look into it as I may want to change the picture from time to time. If I get around to finding out how it happened, I’ll let you know.

black arrow

12/19/16 ‐ 7:25pm ET December 19, 2016 at 7:25pm ET

Thanks for looking anyway. I can do it if sending messages via an APPLE product trough. Help sent me a link but I knew how to get there and it did not explain how to do it. Sooner or later I will get it

Derek: Las Vegas, NV

12/27/16 ‐ 12:04am ET December 27, 2016 at 12:04am ET

BA, use photo bucket to create a web address for the picture you want to use. Then copy and paste the link under the My Stock Talk Profile tab. If you need further guidance let me know and I’ll lay out every step.

Derek

black arrow

12/27/16 ‐ 7:00am ET December 27, 2016 at 7:00am ET

Derek, This sounds doable even for me :?? After some coffee and other challenges like redoing my Apple ID – or since that is such a nuisance for me for some reason-maybe I will try photo bucket first. It only sounds easy since you were nice enough to apprise me of photo bucket.
Thanks so much
Ba

black arrow

12/27/16 ‐ 5:28pm ET December 27, 2016 at 5:28pm ET

Hi Derek,
Thanks again for the help! As you can see I have done it, but there were a few other things to do as well. You may not have had to do this, but I was moving some ice out of the driveway to name one.
Happy New Year to all of us

Derek: Las Vegas, NV

12/27/16 ‐ 5:40pm ET December 27, 2016 at 5:40pm ET

Hahaha.. Awesome! Nope no ice for me… Keep the daily chart reading lessons coming. I just recently started learning so I find your lessons very valuable.

Thanks!

Derek

Sbless

12/15/16 ‐ 11:43am ET December 15, 2016 at 11:43am ET

In at $75.78.

black arrow

12/15/16 ‐ 1:13pm ET December 15, 2016 at 1:13pm ET

Is this a good pick?
Id say so:
Gilead Sciences rose yesterday with the second straight session of upside option activity, indicating that traders may see a rebound in beaten-down pharmaceuticals.

Pharmaceuticals have lagged the broader market for most of the year, under pressure ever since then-presidential candidate Hillary Clinton criticized drug prices in September 2015. But yesterday the iShares Nasdaq Biotechnology Index Fund–which counts Gilead as its third-largest holding–closed higher while the S&P 500 sold off.

Our monitoring system detected the purchase of some 7,800 May 85 calls for $2.10 to $2.48 yesterday. Volume was more than 6 times the strike’s open interest, showing that this is new positioning, and follows buying in the December 76 calls on Tuesday.

Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)

GILD rose 1.46 percent to $74.84 yesterday, its fourth consecutive winning session, but is down 4 percent in the last three months. The drug company reported mixed results on Nov. 1 and is expected to announce its next quarterly numbers after the close on Jan. 31.
time to check out the call area that Roger Hill mentioned – Kudos Roger!!

black arrow

12/15/16 ‐ 1:32pm ET December 15, 2016 at 1:32pm ET

Sorry I should have given a source I was on TD Ameritrade jumped to Yahoo.
I was a blurb from OptionsMonster staff dec 15 title was Why Bulls keep buying Gild calls

Michael Sessions

12/17/16 ‐ 10:31pm ET December 17, 2016 at 10:31pm ET

Are you aware of the following?
“12/15/16 GILD Losing Ground After Court Ruling
Gilead Sciences Inc. (GILD) Is Losing
Ground After Court Ruling
must pay Merck & Co. (MRK) $2.54 billion”
Or do you usually recommend a stock in the face of news like this?
Does your recommendation still hold?

Jim Pearce

12/19/16 ‐ 9:29am ET December 19, 2016 at 9:29am ET

Yes I am, and there was dialogue regarding it under the general Stock Talk page on Friday: http://www.investingdaily.com/systematic-wealth/stock-talk/#comment-82133.

black arrow

12/19/16 ‐ 11:29am ET December 19, 2016 at 11:29am ET

Hi Michael,
On GILD I have a couple of calls [my disclaimer is I am NO EXPERT at Options] but
gild 20 Jan17 72.50 call shows a day gain of $57.00 at 18.39%
My May 17 85 call is up today at 28 / 7.33%
My stock purchase of last week is showing a day gain of 103.50/ 1.4%
Hope that helps its never easy being involved with the “Wall of Worry”; but Jim Pearce removes a degree of our worries. So don’t worry be Happy

black arrow

12/19/16 ‐ 12:36pm ET December 19, 2016 at 12:36pm ET

If you clic my chart of DEC 15 post with a link to GILD you can see a textbook example of a BULLISH ENGULFING!!
Cheers

black arrow

12/21/16 ‐ 7:23am ET December 21, 2016 at 7:23am ET

Hi, I am making this entry to show you the classic Cup and handle pattern on GILD. This is a bullish continuation pattern that takes a while to unfold. http://schrts.co/vW0Ir0

Cheers

Jim Pearce

12/21/16 ‐ 9:36am ET December 21, 2016 at 9:36am ET

BA, thank you for sharing that. I put a six month target holding period on this one because I believe it will take at least one more quarter of operating results before GILD’s undervaluation becomes readily apparent. But it is so beaten down that just a little unexpected good news could send it upward which is why I didn’t want to wait too long to get into it and risk missing out on that move.

black arrow

12/22/16 ‐ 5:33am ET December 22, 2016 at 5:33am ET

Hi folks,
Google this:
Gilead Sciences: Buying Alexion Could Solve Both Their Problems — Barron’s Blog
Also, in Japan one of Gileads drugs has been approved.
There is another whole article in Barron’s as well which even suggests a Put to buy to bring in income if you have the stock. So just some good news Jim mentioned good news may be
Helpful.

black arrow

01/04/17 ‐ 10:42am ET January 4, 2017 at 10:42am ET

Gild has crashed through the upper Bollinger Band accordingly I sold my near term Option; however I am holding the stock since I don’t have as much profit at this time. Charts watchers look at that Candle !!

Jim Pearce

01/04/17 ‐ 10:52am ET January 4, 2017 at 10:52am ET

This seems to be the reason for its strength today; I’d been predicting for several months that GILD would move aggressively into the cancer immunotherapy space, and it appears they are now moving in that direction. Good news! http://blogs.barrons.com/stockstowatchtoday/2017/01/04/gilead-sciences-with-new-hire-ma-might-be-on-the-way/?mod=yahoobarrons&ru=yahoo&yptr=yahoo

Rick W.

01/04/17 ‐ 3:29pm ET January 4, 2017 at 3:29pm ET

I’m waiting for a higher low now that we have a higher high. Too many lower highs and lower lows for me to take the bait just yet.

black arrow

01/04/17 ‐ 10:56am ET January 4, 2017 at 10:56am ET

Satisfying to have your prediction bearing fruit sir!!

Jim Pearce

01/04/17 ‐ 11:06am ET January 4, 2017 at 11:06am ET

Here it is: http://www.investingdaily.com/personal-finance/articles/28505/balm-for-gilead-2/. I was a few months early, but I guess it took them a while to come around to my way of thinking! 🙂

Abhijit D

01/04/17 ‐ 12:35pm ET January 4, 2017 at 12:35pm ET

Will this article be available for SW subscribers?

Jim Pearce

01/04/17 ‐ 12:46pm ET January 4, 2017 at 12:46pm ET

That article was published in Personal Finance six months ago, so if you are not a subscriber to PF and can’t go to that link, here it is;

Balm for Gilead
By JIM PEARCE on JULY 29, 2016

Shares of Personal Finance Growth Portfolio holding Gilead Sciences (GILD) dropped nearly 9% in early trading on Tuesday after the company released its third quarter earnings report that fell short of last year’s results. Quarterly revenue of $7.8 billion this year was less than last year’s sales of $8.2 billion, as was net income of $3.5 billion compared to $4.5 billion in 2015.

Until recently, Gilead could do no wrong. From June 2012 to June 2015 Gilead’s share price shot up nearly five-fold as “big pharma” replaced “new tech” as Wall Street’s favorite momentum play. But recent concerns over price-gouging and the high-profile implosion of Valeant Pharmaceuticals have thrown a bucket of cold water on this once red-hot sector.

In Gilead’s case, revenue from its HCV (Hepatitis-C Virus) drug complex is on the wane and management projects it will continue to decline into next year. That’s a problem because HCV drugs accounted for more than half of its total sales during the past twelve months, with HIV products generating about a third of its revenue. Even though its sales for HIV treatments have been growing, the rate of growth is not enough to make up for the decline in HCV sales.

However, Gilead is sitting on a pile of money: $24.6 billion to be exact. The company spent $10 billion to repurchase stock during the first half of this year, but with its share price still dropping perhaps it’s time for Gilead to use that money to make an aggressive move into the cancer immunotherapy field. It could do that quickly by buying one of the small R&D companies that could win FDA approval for a promising treatment within the next year.

With the U.S. presidential election fast approaching, Gilead (and most of the other big pharma companies) should be prepared for a new White House occupant who could crack down on our high drug prices. It may be too late for Gilead to revamp its product lineup for 2017, but it could quickly spend a few billion dollars to buy what may turn out to be the next big thing in cancer treatment.

During the past year cancer immunotherapy has enjoyed heightened interest due to the miraculous recovery by Jimmy Carter from lung and brain cancer after undergoing an experimental form of treatment. That was followed by a high profile investment of $250 million by tech venture capitalist Sean Parker into this type of treatment. Cutting edge work in this field is being performed by relatively small labs using trial studies, but it shouldn’t be long until the FDA starts granting approval for its widespread use in hospitals and cancer treatment centers across the country.

We do not include small-cap biotech stocks in the Personal Finance coverage universe, but we do recommend three such companies in our sister publication, Breakthrough Tech Profits, in large part due to the expertise of Dr. Joe Duarte, a practicing physician and our resident biotech expert. Dr. Duarte would be the first one to tell you that these type of stocks are risky, so it is safer to own several of them rather than rolling the dice with only one. Our guess is it won’t be long until some of the big pharma companies start buying up them up, and Gilead Sciences should be one of the first to make a move.

black arrow

01/04/17 ‐ 1:08pm ET January 4, 2017 at 1:08pm ET

Another upbeat update on GILD! Wow Systematic Wealth members must be working hard :
Gilead Sciences is rebounding today, and traders are betting on more gains by the end of this week.

Our scanners show that 3,000 Weekly 75.50 calls expiring this Friday were purchased for $0.40 to $1.57 today. Volume surpassed open interest of 1,207 contracts, indicating that this is fresh buying.

GILD is up 3.22 percent to $76.55 in morning trading but is down 5 percent in the last three months. The drug maker’s last quarterly report on Nov. 1 was mixed, and its next earnings release is expected after the close on Jan. 31.

Overall option volume is about average in GILD so far today.

source TD Ameritrade

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